This case study of a mid-century office building in Melbourne, typical across many Australian cities, examines its potential for a retrofit. However, what the authors found is that to encourage more adaptive reuse projects, strong government incentives are necessary. Tax breaks, grants, faster permitting processes, and zoning changes are possible solutions. But the benefits can be numerous.
Spinifex is an opinion column. If you would like to contribute, contact us to ask for a detailed brief.
COVID-19 fundamentally reshaped workplace dynamics. One consequence is the notable rise in office vacancy rates, particularly in city CBDs. In 2024, Melbourne’s CBD vacancy rate hit 19.6 per cent, the highest since 1995, and Sydney’s vacancy rate was at 15.6 per cent in the June quarter.
These vacancies highlight a critical need to explore adaptive reuse opportunities for underutilised buildings from several different perspectives, including optimising such buildings to solve the housing crisis, exploring alternatives to build less, and ultimately supporting net-zero targets. Our study focused on a secondary grade office building constructed before 1990, presenting unique yet challenging opportunities to address both economic and environmental concerns and how best to use what had been city office and retail space.
The case study building, located in the Melbourne CBD, is currently vacant, other than a store on the ground floor, and is listed in the Victorian Heritage Inventory for its post-war modernist style and distinctive façade. It represents an example of mid-century office buildings across capital cities facing vacancy. We focused on this secondary-grade structure, querying the potential for transformation into viable alternatives, including student accommodation or mixed-use developments. The research provided actionable insights for policymakers, developers, and other stakeholders invested in urban renewal, suitable for sustainable and circular city development through adaptive reuse.
What is adaptive reuse?
Adaptive reuse is increasingly recognised as a creative and sustainable approach for repurposing existing buildings, offering a means to enhance economic and social value while preserving architectural heritage. This breathes new life into existing buildings by introducing appropriate new uses and is the process of modifying the function of existing buildings to meet new requirements while maintaining their original structure and materials, where possible. It involves a complex decision-making process from whole-building transformations to partial or temporary adaptations, which help slow or reduce the risk of vacancies becoming permanent.
Whilst adaptive reuse can contribute to several circularity and R-strategies (starting with refuse – the best strategy; to recycle – the worst, and variations in between the best and worst), many policies and protocols globally for adaptive reuse do not explicitly consider circular economy (CE) principles.
We consider adaptive reuse as the process that maintains the structural and architectural features of the building while proposing a new function, including renovating (upgrading architectural and structural elements), refurbishment (upgrading internal finishes and features), retrofitting (enhancing energy efficiency), and reusing the building components (preserving the facade) to meet the demands of the local property market, as is highlighted below.
Several critical factors influence the success of adaptive reuse. Legal considerations, such as compliance with zoning and building codes, are paramount. Additionally, the building’s age, expected lifespan, and physical configuration are essential in assessing its adaptive reuse potential. Timeliness is also crucial; newly vacant buildings are more likely to be repurposed successfully compared to those that have been vacant for extended periods. Successful adaptive reuse projects often require a strategic location, the potential for growth in rental income and property value, and the ability to convert properties attractively.
What did we do?
To investigate the complexities of adaptive reuse for vacant secondary-grade commercial buildings, this study employed a qualitative approach based on focus group discussions framed by an overarching umbrella using the PESTLE framework (Political, Economic, Social, Technological, Legal and Environmental).
This framework ensured a multi-dimensional examination of conversion issues, minimising potential biases by structuring questions that comprehensively addressed each aspect of adaptive reuse.
The research selected key stakeholders with relevant expertise using purposive sampling. These stakeholders came from government and regulatory bodies, property development and financing companies, and professional and industry associations. This approach helped ensure a balanced view of insights from policy, financial, and industry angles and allowed for a thorough analysis of the challenges and opportunities in adaptive reuse.
During 2024, an online focus group (FG) was held with 14 stakeholders for 90 minutes. The focus group split into two breakout rooms for more detailed discussions on specific topics. One room focused on the technical, functional, environmental, and political aspects of adaptive reuse. The other room looked at the economic, political, legal, and social factors involved in the conversion process.
This setup permitted participants to have in-depth discussions and make comparisons across themes. Co-facilitators captured the discussions on a Miro board, which also allowed FG members to add their notes as required.
What did we find out?
The thematic analysis, based on the PESTLE criteria, helped identify important themes and sub-themes related to converting vacant, secondary-grade office buildings in Melbourne CBD.
The analysis revealed that while councils and government bodies want to preserve historical structures, adapting these buildings requires detailed feasibility assessments that involve many factors. Key stakeholders emphasised the importance of addressing economic, technical, and functional challenges through careful planning and input from developers, regulators, and financial institutions.
Economic considerations are most critical and must be noted up front. Developers and property valuers emphasised worst-case scenario analysis in feasibility assessments due to unpredictable challenges that may arise during adaptive reuse projects. They stressed that conversion viability heavily depends on projected market demand for the intended new use, which must align with market trends to justify investment.
Ultimately, in an open market that has no fiscal incentives, the traditional economic objectives need to drive adaptive reuse.
From a technical and functional perspective, significant challenges include retrofitting and upgrading the building services, structural adjustments, and fire safety systems.
Student accommodation is less demanding
These are substantial barriers in many conversions, though stakeholders noted that transitioning office spaces to student accommodation is generally less technically demanding than converting them into residential apartments. This is due to fewer planning and technical requirements, such as building codes for student housing, compared to residential uses like apartments.
The environmental and social benefits of adaptive reuse were also widely acknowledged. Converting vacant office buildings aligns with sustainability goals by reducing demolition waste and revitalising urban spaces. This approach not only conserves resources but also enhances city life by attracting residents and supporting surrounding neighbourhoods, ultimately improving a city’s liveability and economic appeal.
Conclusion
To encourage more adaptive reuse projects, strong government incentives are necessary to make developments more financially appealing. Government incentives may include tax breaks, grants, faster permitting processes, and zoning changes to promote the use of underutilised properties.
The successful implementation of these strategies can help rejuvenate neighbourhoods, create jobs, and preserve historical buildings, all while reducing the environmental impact of new construction. Overall, this approach can revitalise vacant buildings, improve the use of space, and contribute to a decarbonised future.
With further funding, this project will be expanded to include other Australian and international cities facing similar significant underutilisation of commercial buildings. Sharing knowledge and best practices across countries will help highlight the importance of adaptive reuse, ultimately building urban resilience and sustainability as populations grow and environmental concerns are only increasing.
